D. S. Partnership vs Natrip
- Court
- Delhi High Court
$~
* IN THE HIGH COURT OF DELHI AT NEW DELHI
Judgment reserved on: 12.08.2026
Judgment pronounced on:02.09.2026
# CNR No. DLHC011798302016
+ O.M.P. (COMM) 419/2016
D. S. PARTNERSHIP .....Petitioner
Through: Mr. Vinayak Suthar, Adv.
versus
NATRIP .....Respondent
Through: Mr. Ravi Varma and Mr. Ayush
Srivastava, Advs.
CORAM:
HON'BLE MR. JUSTICE OM PRAKASH SHUKLA
JUDGMENT
% 02.09.2026
1. The present petition has been filed under Section 34 of the
1 2
Arbitration and Conciliation Act, 1996 by D. S. Partnership ,
3
challenging the arbitral award dated 02.04.2016 passed by a three-
member learned Arbitral Tribunal comprising Mr. Amarjit Singh
Kataria, Presiding Arbitrator, Mr. Arvind Kumar Gupta and Mr.
Praveen Mahajan. The arbitral proceedings arose out of an
International Commercial Arbitration within the meaning of Section
2(1)(f) of the Act.
2. The Petitioner seeks interference with the impugned Award
principally on the ground that the learned Arbitral Tribunal, having
found that the additional work was actually performed by the
Petitioner, erred in denying compensation for the said work on
1
“the Act” hereinafter
2
“Petitioner”, hereinafter
3
“impugned award” hereinafter
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account of non-compliance with Clause 8.2(iv) of Contract-I.
4
3. Briefly stated, the NATRIP Implementation Society was
constituted for the implementation of the National Automotive Testing
and R&D Infrastructure Project at various locations in India, including
Chennai, Pune and Manesar.
4. The project involved the establishment of specialised
5
automotive testing facilities, including a Power Train building
6 7
containing Engine Test Cells and Vehicle Test Cells . The work also
involved the development of utilities and associated facilities, both
within and outside the Test Cell areas.
5. For this purpose, the parties entered into two contracts. The first
was Contract-I dated 7th August, 2009, under which the Petitioner
was engaged to provide consultancy services relating to the
evaluation, examination and validation of designs of utilities forming
part of the civil works contracts of the Respondent. The contract value
was capped at GBP 71,200, which included 520 man-hours in the
United Kingdom at the rate of GBP 85 per hour, for a period of one
year.
6. Mr. Y.V. Narsimha Rao, Assistant Director (Technical), was
designated as the Respondent’s authorised representative under
Contract-I.
4
“Respondent” hereinafter
5
“PWT” hereinafter
6
“ETCs” hereinafter
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7. Thereafter, the parties entered into Contract-II dated
13.04.2010. Contract-II was a lump-sum contract under which the
Petitioner was entrusted with providing detailed designs for the
mechanical and electrical utilities for a consideration of GBP 119,500.
8. Mr. Saurabh Dalela, Additional Director, was designated as the
Respondent’s authorised representative under Contract-II.
9. Apparently, it seems that during the execution of Contract-II,
the Petitioner took the view that the existing utilities outside the Test
Cell areas, which had been designed by a third-party contractor on the
basis of the initial requirements, were inadequate to support the
specialised utilities proposed inside the Test Cells. Therefore, the
Petitioner considered it necessary to modify the existing designs and
harmonise the utilities and General Arrangement drawings of the
buildings with the requirements of the Test Cell facilities.
10. Accordingly, the Petitioner undertook the additional work. It is
the Petitioner’s case that the work was carried out pursuant to
discussions, correspondence and meetings with the Respondent’s
officials, including Mr. Saurabh Dalela and Mr. V.P. Singh, Director
(Infrastructure). The Petitioner, thereafter, sought payment for the
additional man-hours at the rate of GBP 85 per hour, treating the work
as additional work under Contract-I.
7
“VTCs” hereinafter
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11. The Respondent disputed its liability. To understand the crux of
the dispute, it is relevant to note Clause 8.2(iv) of Contract-I, which
required the Consultant to obtain prior written approval before
undertaking any work likely to result in the stipulated allocation of
520 man-hours being exceeded.
12. The Petitioner relied upon various communications, discussions
and meetings with the Respondent’s officials to establish that the
additional work had been undertaken with the Respondent’s
knowledge and approval.
13. The Respondent, on the other hand, contended that the work
claimed as additional was either covered by the lump-sum scope of
Contract-II or, in any event, had been undertaken without the prior
written approval required under Clause 8.2(iv) of Contract-I.
14. Thereafter, the dispute in regard to the payment for additional
work was referred to arbitration in accordance with Clause 11 of
Contract-I.
15. Upon entering the reference and completion of the pleadings,
the learned Arbitral Tribunal framed 13 issues for determination. The
learned Arbitral Tribunal rejected the Respondent’s preliminary
objection to its jurisdiction and held that the dispute substantially
arose under Contract-I and fell within its jurisdiction.
16. On the merits of the dispute, the learned Arbitral Tribunal
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acknowledged that the Petitioner had carried out certain additional
work, including changes to the General Arrangement drawings and
harmonisation of utilities. It, however, distinguished between the fact
that the additional work was carried out and the Petitioner’s
contractual entitlement to payment for such work under the agreed
terms of the Contract.
17. While deciding the claims relating to the additional work, the
learned Arbitral Tribunal categorically rejected the Respondent’s
defence that the entire additional work was within the fixed-price
scope of Contract-II.
18. The learned Arbitral Tribunal, thereafter, examined whether the
Petitioner was entitled to payment for the additional work under
Contract-I. Referring to Clause 8.2(iv) of Contract-I, it held that prior
written approval from the Respondent’s authorised representative was
a mandatory prerequisite for undertaking any work which was likely
to result in the stipulated allocation of 520 man-hours being exceeded.
19. The Tribunal then examined whether the approvals relied upon
by the Petitioner satisfied this requirement. It held that the
communications with, or approvals allegedly granted by, Mr. Saurabh
Dalela, who was the authorised representative under Contract-II, could
not satisfy the requirement of approval under Contract-I. It similarly
found that the discussions with Mr. V.P. Singh did not amount to
compliance with Clause 8.2(iv).
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20. Further, the learned Arbitral Tribunal also rejected the
Petitioner’s alternative claim based on quantum meruit . It held, inter
alia , that a subsisting Contract governed the relationship between the
parties and expressly provided for additional work, but the Petitioner
had not complied with the said provision. It further found that there
was no evidence that the Respondent had accepted the additional work
and that the necessary pleadings for a claim under Section 70 of the
8
Indian Contract Act, 1872 were also absent.
21. Mr. Vinayak Suthar, learned Counsel for the Petitioner, assailed
the impugned Award by submitting that the Award is self-
contradictory and suffers from an inconsistency which goes to the root
of the matter. According to the learned Counsel, the Tribunal
committed a fundamental error in finding that the additional work was
in fact executed by the Petitioner and did not form part of Contract-II,
while at the same time refusing to award any compensation for the
same either under Contract-I or on the principle of quantum meruit ,
thereby permitting the Respondent to retain the benefit of the work
without making any payment for it.
22. Learned Counsel for the Petitioner further submitted that the
refusal to award compensation was contrary to the Tribunal’s own
findings and also violated Section 18 of the Act. According to him,
once the execution of the additional work had been established, there
was no legal impediment to awarding compensation for the same. In
refusing such compensation, the Tribunal, according to the learned
8
“ICA” hereinafter
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Counsel, failed to treat the parties equally as required under Section
18 of the Act.
23. The second limb of the challenge relates to the significance
given by the Tribunal to the requirement of prior written approval
under Clause 8.2(iv). According to learned Counsel for the Petitioner,
the requirement was not mandatory and, in any event, stood waived or
was otherwise satisfied by the conduct of the Respondent. In this
regard, reliance was placed on the correspondence and meetings
involving senior officials of the Respondent, particularly Mr. Saurabh
Dalela and Mr. V.P. Singh.
24. It was submitted that the Respondent was fully aware of the
additional work and, having permitted its execution and obtained the
benefit thereof, could not subsequently rely upon the absence of
formal approval to deny payment. It was also pointed out that Mr.
Y.V. Narasimha Rao had raised no contemporaneous objection to the
additional work at the time of its execution. Learned Counsel
specifically relied upon the emails at pages 332 to 337 and the minutes
of meeting at pages 338 to 343 to contend that Mr. Y.V. Narasimha
Rao was aware of the additional work and its proposed billing under
Contract-I.
25. The third ground relates to the findings of the Tribunal
regarding the proforma invoices. It was submitted that the Tribunal, in
Paragraphs 54 and 55 of the Award, had incorrectly recorded that the
required proforma invoices had not been raised. In this regard,
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reliance was placed upon the invoices at pages 379, 396 and 448. It
was further submitted that the finding was also contrary to the
Tribunal’s own observations in Paragraphs 38 to 40 and 48 to 49 of
the impugned Award regarding the manner in which the invoices had
been raised and considered by the Respondent.
26. Learned Counsel also challenged the rejection of the claim on
the basis of quantum meruit , contending that even if payment was not
recoverable strictly under Contract-I, the Tribunal ought to have
granted compensation for the additional work and which was neither
illegal nor gratuitous.
27. Per contra , learned Counsel appearing for the Respondent
submitted that none of the objections raised by the Petitioner falls
within the limited scope of interference under Section 34 of the Act. It
was submitted that this Court does not sit as a Court of appeal over the
learned Arbitral Tribunal and cannot re-appreciate the evidence or
substitute its own view with the view of the Tribunal, particularly
where the view taken is a possible view on the material before it.
28. According to the learned Counsel, Clause 8.2(iv) of Contract-I
was clear and unambiguous and required prior written approval before
undertaking work likely to exceed the overall allocation of 520 man-
hours. It was submitted that no such approval had been obtained from
Mr. Y.V. Narsimha Rao, the designated authorised representative
under Contract-I. Reliance was also placed upon the cross-
examination of CW-1, Mr. Wadiyaralalage Piyatissa Somarathne,
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particularly Questions Nos. 62, 63, 66 and 85.
29. As regards the claim on the basis of quantum meruit , learned
Counsel for the Respondent disputed its applicability and submitted
that the said principle could not be invoked to circumvent the agreed
contractual conditions governing entitlement to additional
remuneration. According to him, the impugned Award is well
reasoned, consistent with public policy and does not suffer from any
error which would warrant interference under Section 34 of the Act.
30. This Court has heard the learned Counsel for the parties and
carefully perused the material on record.
31. Before this Court dwells upon analysing the rival contentions, at
the outset, it is relevant to note that the impugned Award was rendered
in an International Commercial Arbitration.
9
32. By the Arbitration and Conciliation (Amendment) Act, 2015 ,
the legislature introduced “ patent illegality appearing on the face of
the award ” as an additional ground for interference under Section 34
by adding Section 34(2A), but consciously and deliberately ousted its
applicability to International Commercial Arbitration from its ambit.
33. Therefore, the ground of patent illegality under Section 34(2A)
is not available to the Petitioner. Accordingly, the challenge in the
present case has to be examined on the ground of conflict with the
9
“2015 Amendment Act” hereinafter
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public policy of India under Section 34(2)(b)(ii) of the Act.
34. The scope of interference under the head of “public policy”
after the 2015 Amendment Act was succinctly examined and
explained by the Hon’ble Supreme Court in OPG Power Generation
10
(P) Ltd. v. Enexio Power Cooling Solutions (India) (P) Ltd. . The
relevant observations are reproduced hereinbelow:
42. The aforementioned judicial pronouncements were all prior
to the 2015 Amendment. Notably, prior to the 2015 Amendment the
expression "in contravention with the fundamental policy of Indian
law" was not used by the legislature in either Section 34(2)(b)(ii)
or Section 48(2)(b). The pre-amended Section 34(2)(b)(ii) and its
Explanation read:
“34. Application for setting aside arbitral award.—(1)
(2) An arbitral award may be set aside by the court only
if—
(b) the court finds that-
ii) the arbitral award is in conflict with the public
policy of India.
Explanation.-Without prejudice to the generality of sub-clause (i),
it is hereby declared, for the avoidance of any doubt, that an award
is in conflict with the public policy of India if the making of the
award was induced or affected by fraud or corruption or was in
violation of Section 75 or Section 81.”
43. Whereas pre-amended Section 48(2)(b) and its Explanation
read:
“48. Conditions for enforcement of foreign awards.—(1)
(2) Enforcement of an arbitral award may also be refused if
the court finds that-(a)
(b) the enforcement of the award would be contrary to the
public policy of India.
Explanation.—Without prejudice to the generality of sub-clause (b)
of this section, it is hereby declared, for the avoidance of any
doubt, that an award is in conflict with the public policy of India if
the making of the award was induced or affected by fraud or
corruption.”
10
(2025) 2 SCC 417
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44. By the 2015 Amendment, in place of the old Explanation to
Section 34(2)(b)(i), Explanations 1 and 2 were added to remove
any doubt as to when an arbitral award is in conflict with the
public policy of India.
45. At this stage, it would be pertinent to note that we are
dealing with a case where the application under Section 34 of the
1996 Act was filed after the 2015 Amendment , therefore the newly
substituted / added Explanations would apply.
46. The 2015 Amendment adds two Explanations to each of
the two sections, namely, Section 34(2)(b)(i) and Section
48(2)(b)34, in place of the earlier Explanation. The significance
of the newly inserted Explanation 1 in both the sections is two-
fold. First, it does away with the use of words: (a) "without
prejudice to the generality of sub-clause (ii" in the opening part
of the pre-amended Explanation to Section 34(2)(b)(i; and (b)
"without prejudice to the generality of clause (b) of this section"
in the opening part of the pre-amended Explanation to Section
48(2)(b); secondly, it limits the expanse of public policy of India
to the three specified categories by using the words "only if'.
Whereas, Explanation 2 lays down the standard for adjudging
whether there is a contravention with the fundamental policy of
Indian law by providing that a review on merits of the dispute
shall not be done. This limits the scope of the enquiry on an
application under either Section 34(2)(b)(ii) or Section 48(2)(b)
of the 1996 Act.
47. The 2015 Amendment by inserting sub-section (2-A) in
Section 34, carves out an additional ground for annulment of an
arbitral award arising out of arbitrations other than international
commercial arbitrations. Sub-section (2-A) provides that the
Court may also set aside an award if that is vitiated by patent
illegality appearing on the face of the award. This power of the
Court is, however, circumscribed by the proviso, which states that
an award shall not be set aside merely on the ground of an
erroneous application of the law or by reappreciation of evidence.
48. Explanation 1 to Section 34(2)(b)(i), specifies that an
arbitral award is in conflict with the public policy of India, only if:
(i) the making of the award was induced or affected by
fraud or corruption or was in violation of Section 75 or
Section 81; or
(ii) it is in contravention with the fundamental policy of
Indian law; or
(iii) it is in conflict with the most basic notions of morality
or justice.
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49. In the instant case, there is no allegation that the making of
the award was induced or affected by fraud or corruption, or was
in violation of Section 75 or Section 81. Therefore, we shall
confine our exercise in assessing as to whether the arbitral award
is in contravention with the fundamental policy of Indian law,
and/or whether it conflicts with the most basic notions of morality
or justice. Additionally, in the light of the provisions of sub-section
(2-A) of Section 34, we shall examine whether there is any patent
illegality on the face of the award.
50. Before undertaking the aforesaid exercise, it would be
apposite to consider as to how the expressions:
(a) "in contravention with the fundamental policy of
Indian law";
(b) "in conflict with the most basic notions of morality or
justice”; and
(c) “patent illegality” has been construed.
51. As discussed above, till the 2015 Amendment the
expression “in contravention with the fundamental policy of
Indian law" was not found in the 1996 Act. Yet, in Renusagar21,
in the context of enforcement of a foreign award, while
construing the phrase "contrary to the public policy", this Court
held that for a foreign award to be contrary to public policy mere
contravention of law would not be enough rather it should be
contrary to:
(a) the fundamental policy of Indian law; and/or
(b) the interest of India; and/or
(c) justice or morality.
52. In the judicial pronouncements that followed Renusagar21,
already discussed above, the domain of what could be considered
contrary to the "public policy of India"/"fundamental policy of
Indian law" expanded, resulting in much greater interference with
arbitral awards than what the lawmakers intended. This led to the
2015 Amendment in the 1996 Act.
53. In SangyongEngg., this Court dealt with the effect of the
2015 Amendment. While doing so, it took note of a
supplementary report of February 2015 of the Law Commission
of India made in the context of the proposed 2015 Amendments.
The said supplementary report has been extracted in para 30 of
that judgment. The key features of it are summarised below:
(a) Mere violation of law of India would not be a violation
of public policy in cases of international commercial
arbitrations held in India.
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(b) The proposed 2015 Amendments in the 1996 Act [i.e.
in Sections 34(2)(b)(ii) and 48(2)(b) including insertion of
sub-section (2-A) in Section 34] were on the assumption
that the terms, such as, "fundamental policy of Indian
law" or conflict with "most basic notions of morality or
justice" would not be widely construed.
(c) The power to review an award on merits is contrary to
the object of the Act and international practice.
(d) The judgment in Western Geco28 would expand the
court's power, contrary to international practice. Hence, a
clarification needs to be incorporated to ensure that the
term "fundamental policy of Indian law" is narrowly
construed. The applicability of Wednesbury principles to
public policy will open the floodgates. Hence, Explanation
2 to Section 34(2)(b)(ii) has been proposed.
54. After taking note of the supplementary report, the
Statement of Objects and Reasons of the 2015 Amendment Act,
and the amended provisions of Sections 28, 34 and 48, this Court
held : ( Ssangyong Engg. case [ Ssangyong Engg. & Construction
Co. Ltd. v. NHAI , (2019) 15 SCC 131 : (2020) 2 SCC (Civ) 213] ,
SCC pp. 169-71 & 194, paras 34, 37-41 & 69)
“ 34 . What is clear, therefore, is that the expression “public
policy of India”, whether contained in Section 34 or in Section
48, would now mean the “fundamental policy of Indian law” as
explained in paras 18 and 27 of Associate Builders [ Associate
Builders v. DDA , (2015) 3 SCC 49 : (2015) 2 SCC (Civ) 204]
i.e. the fundamental policy of Indian law would be relegated
to Renusagar [ Renusagar Power Co. Ltd. v. General Electric
Co. , 1994 Supp (1) SCC 644] understanding of this expression.
This would necessarily mean that Western Geco [ ONGC
Ltd. v. Western Geco International Ltd. , (2014) 9 SCC 263 :
(2014) 5 SCC (Civ) 12] expansion has been done away with. In
short, Western Geco [ ONGC Ltd. v. Western Geco
International Ltd. , (2014) 9 SCC 263 : (2014) 5 SCC (Civ) 12]
, as explained in paras 28 and 29 of Associate
Builders [ Associate Builders v. DDA , (2015) 3 SCC 49 : (2015)
2 SCC (Civ) 204] , would no longer obtain, as under the guise
of interfering with an award on the ground that the arbitrator
has not adopted a judicial approach, the court's intervention
would be on the merits of the award, which cannot be permitted
post amendment. However, insofar as principles of natural
justice are concerned, as contained in Sections 18 and
34(2)( a )( iii ) of the 1996 Act, these continue to be the grounds
of challenge of an award, as is contained in para 30
of Associate Builders [ Associate Builders v. DDA , (2015) 3
SCC 49 : (2015) 2 SCC (Civ) 204] .
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35 .- 36 .*
37 . Insofar as domestic awards made in India are concerned,
an additional ground is now available under sub-section (2-A),
added by the Amendment Act, 2015 to Section 34. Here, there
must be patent illegality appearing on the face of the award,
which refers to such illegality as goes to the root of the matter,
but which does not amount to mere erroneous application of
the law. In short, what is not subsumed within “the
fundamental policy of Indian law”, namely, the contravention
of a statute not linked to public policy or public interest, cannot
be brought in by the backdoor when it comes to setting aside an
award on the ground of patent illegality .
38 . Secondly, it is also made clear that reappreciation of
evidence, which is what an appellate court is permitted to do,
cannot be permitted under the ground of patent illegality
appearing on the face of the award.
39 . To elucidate, para 42.1 of Associate Builders [ Associate
Builders v. DDA , (2015) 3 SCC 49 : (2015) 2 SCC (Civ) 204] ,
namely, a mere contravention of the substantive law of India,
by itself, is no longer a ground available to set aside an
arbitral award . Para 42.2 of Associate Builders [ Associate
Builders v. DDA , (2015) 3 SCC 49 : (2015) 2 SCC (Civ) 204] ,
however, would remain, for if an arbitrator gives no reasons for
an award and contravenes Section 31(3) of the 1996 Act, that
would certainly amount to a patent illegality on the face of the
award.
40 . The change made in Section 28(3) by the Amendment
Act really follows what is stated in paras 42.3 to 45
in Associate Builders [ Associate Builders v. DDA , (2015) 3
SCC 49 : (2015) 2 SCC (Civ) 204] , namely, that the
construction of the terms of a contract is primarily for an
arbitrator to decide, unless the arbitrator construes the
contract in a manner that no fair-minded or reasonable
person would; in short, that the arbitrator's view is not even a
possible view to take. Also, if the arbitrator wanders outside
the contract and deals with the matters not allotted to him, he
commits an error of jurisdiction. This ground of challenge
will now fall within the new ground added under Section
34(2-A) .
41 . What is important to note is that a decision which is
perverse, as understood in paras 31 and 32 ofAssociate
Builders [ Associate Builders v. DDA , (2015) 3 SCC 49 : (2015)
2 SCC (Civ) 204] , while no longer being a ground for
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challenge under “public policy of India”, would certainly
amount to a patent illegality appearing on the face of the
award. Thus, a finding based on no evidence at all or an award
which ignores vital evidence in arriving at its decision would
be perverse and liable to be set aside on the ground of patent
illegality. Additionally, a finding based on documents taken
behind the back of the parties by the arbitrator would also
qualify as a decision based on no evidence inasmuch as such
decision is not based on evidence led by the parties, and
therefore, would also have to be characterised as perverse .
*
69 . We therefore hold, following the aforesaid authorities, that
in the guise of misinterpretation of the contract, and
consequent “errors of jurisdiction”, it is not possible to state
that the arbitral award would be beyond the scope of
submission to arbitration if otherwise the aforesaid
misinterpretation (which would include going beyond the terms
of the contract), could be said to have been fairly
comprehended as “disputes” within the arbitration agreement
or which were referred to the decision of the arbitrators as
understood by the authorities above. If an arbitrator is alleged
to have wandered outside the contract and dealt with matters
not allotted to him, this would be a jurisdictional error which
could be corrected on the ground of “patent illegality”, which,
as we have seen, would not apply to international commercial
arbitrations that are decided under Part II of the 1996 Act . To
bring in by the backdoor grounds relatable to Section 28(3) of
the 1996 Act to be matters beyond the scope of submission to
arbitration under Section 34(2)( a )( iv ) would not be permissible
as this ground must be construed narrowly and so construed,
must refer only to matters which are beyond the arbitration
agreement or beyond the reference to the Arbitral Tribunal.”
55. The legal position which emerges from the aforesaid
discussion is that after "the 2015 Amendments" in Section
34(2)(b)(ii) and Section 48(2)(b) of the 1996 Act, the phrase "in
conflict with the public policy of India" must be accorded a
restricted meaning in terms of Explanation 1. The expression "in
contravention with the fundamental policy of Indian law" by use
of the word "fundamental" before the phrase "policy of Indian
law" makes the expression narrower in its application than the
phrase "in contravention with the policy of Indian law", which
means mere contravention of law is not enough to make an
award vulnerable. To bring the contravention within the fold of
fundamental policy of Indian law, the award must contravene all
or any of such fundamental principles that provide a basis for
administration of justice and enforcement of law in this country.
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56. Without intending to exhaustively enumerate instances of
such contravention, by way of illustration, it could be said that:
(a) violation of the principles of natural justice;
(b) disregarding orders of superior courts in India or the binding
effect of the judgment of a superior court; and
(c) violating law of India linked to public good or public interest,
are considered contravention of the fundamental policy of Indian
law.
However, while assessing whether there has been a contravention
of the fundamental policy of Indian law, the extent of judicial
scrutiny must not exceed the limit as set out in Explanation 2 to
Section 34(2) b)(ii).
Most basic notions of morality and justice
57. In Renusagar [ Renusagar Power Co. Ltd. v. General Electric
Co. , 1994 Supp (1) SCC 644] this Court held that an arbitral award
is in conflict with the public policy of India if it is, inter alia,
contrary to “justice and morality”. Explanation 1, inserted by the
2015 Amendment, makes it clear that an award is in conflict with
the public policy of India, inter alia, if it conflicts with the “most
basic notions of morality or justice”.
Justice
58. Justice is the virtue by which the society/court/Tribunal
gives a man his due, opposed to injury or wrong. Justice is an act
of rendering what is right and equitable towards one who has
suffered a wrong. Therefore, while tempering justice with mercy,
the court must be very conscious, that it has to do justice in exact
conformity with some obligatory law, for the reason that human
actions are found to be just or unjust on the basis of whether the
same are in conformity with, or in opposition to, the law.
Therefore, in "judicial sense", justice is nothing more nor less
than exact conformity to some obligatory law; and all human
actions are either just or unjust as they are in conformity with, or
in opposition to, the law.
59. But, importantly, the term "legal justice" is not used in
Explanation 1, therefore simple conformity or non-conformity
with the law is not the test to determine whether an award is in
conflict with the public policy of India in terms of Explanation 1.
The test is that it must conflict with the most basic notions of
justice. For lack of any objective criteria, it is difficult to
enumerate the "most basic notions of justice". More so, justice to
one may be injustice to another. This difficulty has been
acknowledged by many renowned jurists, as is reflected in the
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observations of this Court in State (NCT of Delhi) v. Gurdip
those arrayed on opposite sides. "One man's justice is another's
injustice" [Ralph Waldo Emerson: Essays (1803-82), First
Series, 1841, "Circles"]. Justice Cardozo said: The web is
entangled and obscure, shot through with a multitude of shades
and colors, the skeins irregular and broken. Many hues that seem
to be simple, are found, when analysed, to be a complex and
uncertain blend. Justice itself, which we are wont to appeal to as
a test as well as an ideal, may mean different things to different
minds and at different times. Attempts to objectify its standards or
even to describe them have never wholly succeeded! (Selected
Writings of Cardozo, pp. 223-224, Falcon Publications, 1947)."
(emphasis in original)
60. In Associate Builders [Associate Builders v. DDA, (2015) 3
SCC 49 : (2015) 2 SCC (Civ) 204] , while this Court was dealing
with the concept “public policy of India”, in the context of a
Section 34 challenge prior to the 2015 Amendment, it was held that
an award can be said to be against justice only when it shocks the
conscience of the court [ See Associate Builders case, (2015) 3
SCC 49, para 36 : (2015) 2 SCC (Civ) 204] . The Court illustrated
by stating that where an arbitral award, without recording
reasons, awards an amount much more than what the claim is
restricted to, it would certainly shock the conscience of the court
and render the award vulnerable and liable to be set aside on the
ground that it is contrary to justice.
61. In Ssangyong, which dealt with post the 2015 Amendment
scenario, it was observed that an argument to set aside an award
on the ground of being in conflict with "most basic notions of
justice", can be raise only in very exceptional circumstances, that
is, when the conscience of the court is shocked by infraction of
some fundamental principle of justice. Notably, in that case the
majority award created a new contract for the parties by applying
a unilateral circular, and by substituting a workable formula under
the agreement by another, dehors the agreement. This, in the view
of the Court, breached the fundamental principles of justice,
namely, that a unilateral addition or alteration of a contract can
never be foisted upon an unwilling party, nor can a party to the
agreement be liable to perform a bargain not entered with the
other party. However, a note of caution was expressed in the
judgment by observing that this ground is available only in very
exceptional circumstances and under no circumstance can any
court interfere with an arbitral award on the ground that justice
has not been done in the opinion of the court because that would be
an entry into the merits of the dispute.
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62. In the light of the discussion above, in our view, when we
talk about justice being done, it is about rendering, in accord
with law, what is right and equitable to one who has suffered a
wrong. Justice is the virtue by which the society/court/Tribunal
gives a man his due, opposed to injury or wrong. Dispensation of
justice in its quality may vary, dependent on person who
dispenses it. A trained judicial mind may dispense justice in a
manner different from what a person of ordinary prudence would
do. This is so, because a trained judicial mind is likely to figure
out even minor infractions of law/norms which may escape the
attention of a person with ordinary prudence. Therefore, the
placement of words "most basic notions" before "of justice" in
Explanation 1 has its significance. Notably, at the time when the
2015 Amendment was brought, the existing law with regard to
grounds for setting aside an arbitral award, as interpreted by this
Court, was that an arbitral award would be in conflict with public
policy of India, if it is contrary to:
(a) the fundamental policy of Indian law;
(b) the interest of India;
(c) justice or morality; and/or is
(d) patently illegal.
63. As we have already noticed, the object of inserting
Explanations 1 and 2 in place of earlier explanation to Section
34(2)(b)(ii) was to limit the scope of interference with an arbitral
award, therefore the amendment consciously qualified the term
"justice" with "most basic notions" of it. In such circumstances,
giving a broad dimension to this category! would be deviating
from the legislative intent. In our view, therefore, considering
that the concept of justice is open-textured, and notions of justice
could evolve with changing needs of the society, it would not be
prudent to cull out "the most basic notions of justice". Suffice it
to observe, they ought to be such elementary principles of justice
that their violation could be figured out by a prudent member of
the public who may, or may not, be judicially trained, which
means, that their violation would shock the conscience of a
legally trained mind. In other words, this ground would be
available to set aside an arbitral award, if the award conflicts
with such elementary/fundamental principles of justice that it
shocks the conscience of the Court.
Morality
64. The other ground is of morality. On the question of
morality, in Associate Builders, this Court, after referring to the
provisions of Section 23 of the Contract Act, 1872; earlier
decision of this Court in Gherulal; and Indian Contract Act by
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Pollock and Mulla, held that judicial precedents have confined
morality to sexual morality. And if "morality" were to go beyond
sexual morality, it would cover such agreemats as are not illegal
but would not be enforced given the prevailing mores of the day.
The Court also clarified that interference on this ground would
be only if something shocks the Court's conscience.
35. It is clear from the above that, after the 2015 Amendment Act,
the expression “public policy of India” is to be given a restricted
meaning and the Court’s enquiry is confined to the limited grounds
recognised under Explanation 1 to Section 34(2)(b)(ii), including
contravention of the fundamental policy of Indian law and conflict
with the most basic notions of morality or justice. Explanation 2
further clarifies that, while examining whether the fundamental policy
of Indian law has been contravened, the Court cannot sit in appeal
over the view taken by the Tribunal or reassess the merits of the
dispute.
36. Keeping the aforesaid principles in mind, this Court will
examine the challenge raised by the Petitioner against the impugned
Award.
37. The fulcrum of the Petitioner’s argument is that, once the
Tribunal found that the additional work had in fact been executed and
was of the nature of work falling within Contract-I, the Petitioner was
entitled to be paid for the same.
38. In view of this Court, there is an apparent fallacy in this
submission, as it proceeds on the assumption that execution of the
additional work, in itself, creates an entitlement to payment. The fact
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that the work was actually carried out and the question whether the
Petitioner had a right to remuneration for such work are two distinct
questions. The latter has to be determined in accordance with the
terms agreed between the parties and incorporated in the Contract.
39. In the present case, Clause 8.2 of Contract-I is relevant as it
specifically envisages a situation where the work is likely to exceed
the overall allocation of 520 man-hours and prescribes the procedure
to be followed in such circumstances. The relevant part of Clause 8.2
reads as under:
“8.2. Submission of ‘Work log-in sheet’ and Issuance of 'Notice
to Proceed’.
(i) The client shall issue 'Notice to Proceed' against
each assignments given to the consultant, upon the
receipt of probable man hours required to be
mobilized by the consultant to complete the task as
assigned by the client.
(ii) The consultant shall submit the work log-in sheet,
indicating the No. of Engineers on job and hours of
working by each Friday of the week through an
electronic mail to the NATIS's authorized
representative.
(iii) The consolidated work log-in sheet shall have to be
submitted separately against each assignment.
(iv) A cumulative work log-in sheet shall be submitted
on the last day of the each month (or next immediate
working day in case of holiday) to monitor the total
hours spent under para 8(b) this agreement.
(v) Prior to proceed with the works, that likely to cross
the overall time allocation of 520 hours, under
para-8(b), the consultant shall necessarily take
prior written approval from the client.”
40. A reading of the aforesaid clause gives a clear and unambiguous
meaning that where any work is likely to exceed the overall allocation
of 520 man-hours, the Consultant is required to obtain the Client’s
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prior written approval before proceeding with such work. There is no
other meaning that can reasonably be attributed to the clause. The use
of the expression “shall necessarily take prior written
approval” reinforces the mandatory nature of this requirement.
41. In the present case, the learned Arbitral Tribunal meticulously
analysed the meaning and purport of Clause 8.2 of Contract-I and
found that Clause 8.2(iv) mandatorily required prior written approval
before undertaking work likely to exceed the stipulated 520 man-hour
allocation.
42. Thus, the dispute is essentially with the finding of fact recorded
by the learned Arbitral Tribunal that no such prior approval was
obtained. In this regard, the Petitioner relies upon the emails at pages
332 to 337, the minutes of meeting at pages 338 to 343, and the
subsequent email at page 362, to contend that Mr. Y.V. Narsimha Rao
was aware of the additional work and of its proposed billing under
Contract-I.
43. Contract-I had specifically designated Mr. Y.V. Narsimha Rao
as the authorised representative for Contract-I. The learned Arbitral
Tribunal has returned a finding of fact that the Petitioner failed to
produce any prior written approval from Mr. Rao authorising the
additional hours beyond the 520 man-hour cap under Contract-I. It
also considered the communications with Mr. Saurabh Dalela and Mr.
V.P. Singh but did not accept them as constituting the approval
required under Clause 8.2(iv), as Mr. Dalela being the authorised
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representative under Contract-II.
44. Thus, the learned Arbitral Tribunal considered both the
contractual language and the Petitioner’s reliance on the
communications and discussions with the Respondent’s officials, but
found the same insufficient to establish the prior written approval
required under Contract-I. This is a pure finding of fact based on the
evidence and reconsidering the effect of those communications would
necessarily require this Court to reassess the evidence, which is
beyond the limited scope of jurisdiction under Section 34.
45. Similarly, with regard to the requirement to raise proforma
invoices, the Petitioner relies upon the invoices at pages 379, 396 and
448 and contended that the requirement under Clause 8.3 was
complied with. The learned Arbitral Tribunal, however, upon
considering the record, held in paragraphs 54 and 55 that no proforma
invoice had been raised in advance as required under Clause 8.3(iii).
This is again a finding based on appreciation of the evidence.
46. In the view of this Court, the Petitioner is essentially seeking a
re-appreciation of the communications relied upon by it and the
invoices placed on record, so as to arrive at a conclusion different
from that of the Tribunal. The sufficiency of the material relied upon
by the Petitioner to establish approval, waiver or acquiescence, or
compliance with the contractual procedure relating to the invoices,
was a matter for the learned Arbitral Tribunal to determine upon
appreciation of the evidence. This Court, in proceedings under Section
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34, cannot undertake such a fresh assessment of the evidence.
47. In support of its challenge, the Petitioner has placed no material
before this Court to show that the learned Arbitral Tribunal’s
assessment in this regard is contrary to the fundamental policy of
Indian law or conflicts with the most basic notions of morality or
justice. Therefore, the finding of the learned Arbitral Tribunal that the
requirements under Clauses 8.2(iv) and 8.3(iii) were not satisfied and
that the Petitioner was consequently not entitled to any additional
payment does not warrant any interference by this Court under Section
34 of the Act.
48. Further, as regards the Petitioner’s contention that the principle
of quantum meruit under Section 70 of the ICA ought to have been
applied, this Court finds that the learned Arbitral Tribunal considered
the said contention as well as the authorities relied upon by both
parties and identified the following five conditions which, according
to the learned Arbitral Tribunal, were required to be satisfied for
invocation of Section 70 of the ICA:
“72. The law laid down in the above said authorities envisage the
following situations for the applicability of the above extracted
section 70 of Act, 1872,
1. Work should have been lawfully executed by one party
for another;
2. It should not be gratuitous;
3. There should be no subsisting contract between the
parties for doing that work or the agreement between the
parties had been held invalid for any reason, whatsoever;
4. Work should have been accepted by the parties; and
5. There should be pleadings in the plaint for claiming
compensation for executing such an additional work.”
49. The grievance of the Petitioner is not majorly with the
conditions identified by the learned Arbitral Tribunal, but with the
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Tribunal’s finding as to whether those conditions stood satisfied. The
learned Arbitral Tribunal found that the first two conditions were
satisfied but held that the remaining three were not fulfilled. The
Petitioner disputes this finding and, in particular, relies upon the email
at page 415 to contend that the additional work was ultimately
accepted and utilised by the Respondent.
50. According to this Court, whether the email at page 415 or the
other material relied upon by the Petitioner was sufficient to establish
acceptance of the additional work was a matter which fell for
consideration by the learned Arbitral Tribunal, which considered the
same and returned a finding that there was no evidence of acceptance
of the additional work by the Respondent. Reconsideration of that
conclusion would again entail re-appreciation of the evidentiary
material, which is beyond the limited scope of interference under
Section 34.
51. As regards the contention that the additional work was never in
dispute, the same does not aid or assist the Petitioner. Since
acceptance of the additional work was identified by the Tribunal as
one of the conditions for the applicability of Section 70 of the ICA,
the Tribunal was required to examine whether the said condition was
satisfied or not.
52. Further, the learned Arbitral Tribunal’s view that the principle
of quantum meruit cannot be invoked to disregard or override the
express terms of a subsisting Contract finds support from the
judgments of the Hon’ble Supreme Court in Alopi Parshad & Sons
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11
Ltd. v. Union of India , and Mahanagar Telephone Nigam Ltd. v.
12
Tata Communications Ltd . It may apply where the Contract does
not govern the work in question or is silent as to the manner in which
additional work is to be undertaken. However, it cannot be invoked to
override the express terms of a subsisting Contract governing the
subject matter of the claim.
53. Even assuming that the Tribunal’s view involves an error of
law, such error would not, by itself, bring the impugned Award within
the scope of “public policy of India” under Section 34(2)(b)(ii). The
error must be of such a nature as to amount to a contravention of the
fundamental policy of Indian law. No such contravention is shown in
the present case. Accordingly, the learned Arbitral Tribunal’s view on
the conditions required for invoking the principle of quantum meruit
does not warrant interference under Section 34.
54. Adverting to the application of law in the facts by the learned
Arbitral Tribunal, it is beyond doubt that Contract-I itself
contemplated the possibility of additional work and expressly
prescribed the conditions subject to which such work could be
undertaken. The learned Arbitral Tribunal, having found that the
requirement of prior written approval from the authorised
representative had not been fulfilled, cannot, therefore, be faulted for
declining to invoke the principle of quantum meruit to bypass the said
contractual requirement.
55. The Petitioner may legitimately disagree with the conclusions
11
AIR 1960 SC 588
12
(2019) 5 SCC 341
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reached by the learned Arbitral Tribunal on the evidence and its
construction of the contractual provisions. Such disagreement with a
plausible view taken by the learned Arbitral Tribunal, however, does
not, in itself, constitute a ground for setting aside an impugned Award
under Section 34 of the Act.
56. Section 28(3) of the Act also requires the learned Arbitral
Tribunal, while deciding and making an Award, to take into account
the terms of the Contract and the trade usages applicable to the
transaction. In the present case, the learned Arbitral Tribunal
considered the terms of the Contracts, the material placed before it and
the submissions of both parties before arriving at its findings.
Therefore, no fault can be attributed to the reasoning of the learned
Arbitral Tribunal.
57. The principle of minimal judicial intervention in arbitral
Awards has repeatedly been emphasized by the Supreme Court.
Recently, the Hon’ble Supreme Court, in Gayatri Balasamy v. ISG
13
Novasoft Technologies Ltd. , reiterated this principle in the context
of Section 34 of the Act and held that a Court exercising jurisdiction
under Section 34 cannot interfere with an arbitral Award merely
because another interpretation of the Contract is possible or a different
view of the evidence could have been taken by the learned Arbitral
Tribunal.
13
(2025) 7 SCC1
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58. Therefore, when viewed within the limited parameters
applicable to an International Commercial Arbitration under Section
34 of the Act, the findings of the learned Arbitral Tribunal do not
disclose even a case of patent illegality, much less any contravention
of the fundamental policy of Indian law or conflict with the most basic
notions of morality or justice. Nor has any other circumstance been
established which would bring the impugned Award within the limited
scope of Section 34(2)(b)(ii) of the Act.
59. For the aforesaid reasons, the petition under Section 34 of the
Act is dismissed.
60. All pending applications, if any, are disposed of.
OM PRAKASH SHUKLA, J.
SEPTEMBER 02, 2026/ ss/gunn
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